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One Loan for Purchase & Renovations

The FNMA HomeStyle conventional mortgage allows a buyer to purchase a home that needs renovations and include them in the financing.This facilitates the purchase of the home and the renovations in one loan rather than getting a separate second mortgage or home equity line of credit.The combination of these loans should save closing costs as well as interest rates which would typically be higher on a home improvement loan.The borrower will need to have an itemized, written bid from a contractor covering the scope of the improvements.Any type of renovation or repair is eligible if it is a permanent part of the property.Improvements must be completed within 12 months from the date the mortgage loan is delivered.15 and 30-year fixed rate and eligible adjustable rate loans are available.Typical FNMA down payments are available starting as low as 3% for a one-unit principal residence to 25% for three and four-unit principal residence and one-unit investment properties.Borrower must choose h…

Get Rid of Things You Don't Need

Periodically, you need to rid yourself of things that are taking up you time and space to make room for more of what you like and want.There's a frequently quoted suggestion that if you haven't used something for two years, maybe it isn't essential in your life.If you have books you'll never read again, give them to someone who will.If you have a deviled egg plate that hasn't been used since the year your Aunt Phoebe gave it to you, it's out of there.Periodically, go through every closet, drawer, cabinet, room and storage area to get rid of the things that are just taking up space in your home and your life. Every item receives the decision to keep or get rid of.Consider these questions as you judge each item:When was the last time you used it?Do you believe you'll use it again?Is there a sentimental reason to keep it?You have four options for the things that you're not going to keep.Give it to someone who needs it or will appreciate itSell it in a gara…

Qualified Charitable Contribution

If you're at an age where you need to be taking Required Minimum Distributions (age 70.5) from your IRA, a qualified charitable contribution and some planning may allow you to lower your overall tax liability.Let's say that a couple's 2019 itemized deductions include $8,000 in property taxes, $4,400 in interest and $20,000 in charitable contributions.That would total $32,400 which exceeds the 2019 $25,300 standard deduction for married couples, 65 years of age or older, filing jointly.Their required minimum distribution from their IRA is $40,000 which will be taxed at ordinary income.If this couple is in the 24% tax bracket, the tax liability would be $9,600.Alternatively, if they made the $20,000 in charitable contributions from their IRA as a Qualified Charitable Contribution, it would not be taxable in the withdrawal.The balance of the RMD of $20,000 would be taxable at 24% which would have a tax liability of $4,800.Their $32,400 worth of itemized deductions would be re…

Auto Pay Your Mortgage Payment

In the time that it takes to write one check, you can set it up with your bank and never have to do it again.You won't have to write checks, envelopes or buy stamps anymore.You'll save time, money and benefit in other ways too.Never be late ... avoid late fees and protect your creditSchedule additional principal contributions monthly to save interest, build equity and shorten the mortgage term.
An extra $200 a month applied to the principal on a $200,000 mortgage at 4.5% for 30 years will result in shortening the loan by 8.5 years.If the loan was paid to term, it would save $52,977 in interest.Use the Equity Accelerator to see how much you can save.It's convenient ... by doing it online with your bank, you'll have a centralized history of the payments.Protect your credit ... your payment history is the single biggest component of your credit score and accounts for over 1/3 of your credit score.Establishing the practice of auto bill pay could run the risk of overd…

To-Do List for Better Homeowners

Checklists work because they contain the important things that need to be done.  They provide a reminder about things we know and realize but may have slipped our minds as well as inform us about things we didn't consider.  Periodic attention to these areas can protect the investment in your home.Change HVAC filters regularly.Consider purchasing a supply of the correct sizes needed onlineand they'll even remind you when it's time to order them again.Change batteries in smoke and carbon monoxide detectors annually.Create and regularly update a Home Inventory to keep track of personal belongings in case of burglary or casualty loss.Keep track of capital improvements, with a Homeowners Tax Guide, made to your home throughout the year that increases your basis and lowers gain. Order free credit reports from all three bureaus once a year at www.AnnualCreditReport.com. Challenge your property tax assessment when you receive that year's assessment when you feel that the value…

Reasons Rental Homes Rank Highest

Single family homes offer the investor an opportunity to borrow large loan-to-value loans at fixed interest rates for long terms.Lenders will loan 75-80% of the purchase price at 5.5% to 6.5% interest rate for thirty years.Compare that with other popular investment alternatives like precious metals, commodities, stocks, and mutual funds and it will be hard to find financing available at all.There may be some short term, one-year, loans at a floating rate tied to prime plus with no guarantee that it will be renewed.Some of those loans require you to have a 50% margin of equity and if the value goes down, you'll have to put up additional cash or be forced to sell.The advantage of having long-term mortgages is that an investor could find the optimal time to sell the property instead of needing to sell it because the term is due, and no other financing is available.Supply and demand cause the real estate market to be higher and lower and a long-term mortgage provides options to sell w…

Will Points Make a Difference

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Lenders typically quote mortgages at a market rate but can offer a lower interest rate loan if the borrower is willing to pay points up-front which is considered pre-paid interest.These points are generally tax deductible for the year paid when the borrower pays them in connection with buying, building or improving their principal residence.A point is one-percent of the mortgage amount.A lender will quote a lower-rate mortgage with a certain number of points.There is not a standard amount; it is an individual company policy.A simple comparison of the two alternatives based on the borrower's ability to pay the points and whether the borrower will stay in the home long enough to recapture the costs will help to determine which loan will provide the cheapest cost of housing.In the example below, two choices are compared; a 4.25% loan with no points vs. a 4.00% loan with one point.If the buyer stays in the home at least 69 months, they will recover the $3,150 cost for the point on the…